Blanket Coverage Insures Against Loss to All Structures Identified

Total Loss to a Blanket Coverage Requires Destruction of All Buildings Described

Valued property statutes have been enacted in several states to avoid disputes over the amount of loss when there is a total destruction of the property. A valued property statute requires, regardless of the true value of the property at the time of the loss, the insurer to pay the amount stated as a policy limit on the policy declarations page.

In Norwood-Redfield Apartments Limited Partnership v. American Family Mutual Insurance Company, a Wisconsin corporation, No. 18-2618, United States Court of Appeals For the Eighth Circuit (May 16, 2019) Norwood-Redfield Apartments Limited Partnership (Norwood) owned an apartment complex consisting of thirty-two buildings. A December 2010 fire destroyed one building and damaged two others. American Family Mutual Insurance Company (American Family) insured the complex under a business owners’ insurance policy and paid Norwood $2,897,896.90 for its loss. Norwood filed suit in Missouri state court, alleging breach of contract and vexatious refusal to pay a claim.

Norwood claimed that it was entitled to receive the policy limit of $31,773,600 because it had suffered a “total loss of the property insured” within the meaning of the Missouri valued policy statute about $29 million dollars more than the actual loss.

Following American Family’s removal of the case, the federal district court rejected that argument and granted American Family’s motion for partial summary judgment. Final judgment was thereafter entered, and Norwood appealed.

Under the Missouri valued policy statute, a policy that insures against loss or damage by fire precludes the insurer from disputing that “the property insured” was worth the full amount of the policy at the time the insurer issued the policy. When the insured suffers a “total loss of the property insured, the measure of damage shall be the amount for which the same was insured,” less any depreciation proved by the insurer.

Norwood argues that it suffered a “total loss of the property insured” because one of its buildings was completely destroyed. Norwood argues that “total loss” refers to how badly the building was damaged, not to how many buildings were damaged. Norwood claims that the following language from the policy declarations establishes that American Family valued each building at $31,773,600: “COVERAGE LIMIT OF INSURANCE PREMIUM BUILDING – Blanket REPLACEMENT COST $31,773,600.”

According to Norwood’s reading, the Missouri valued policy statute disallows American Family from disputing the policy’s valuation of each “BUILDING” and requires American Family to pay $31,773,600 for Norwood’s “total loss.”

The Eighth Circuit concluded that “the property insured” is the thirty-two building complex and not each building in the complex. The first page of the policy declarations describes the insurance coverage as “blanket insurance at the following described premises” and thereafter describes thirty-two premises, each consisting of one building. The policy’s blanket coverage endorsement explains that “the Limit of Insurance shown in the Declarations applies to all the premises described in the Declarations for that coverage,” (emphasis added) meaning that American Family would pay no more than $31,773,600 for loss or damage to the thirty-two buildings. Norwood does not dispute that the policy insured the entire thirty-two building complex.

Because fire destroyed only one building in the thirty-two building complex, Norwood did not suffer a “total loss of the property insured,” and thus the Missouri valued policy statute does not require American Family to pay the full policy amount.

The judgment was affirmed.


Valued policy statutes have been enacted with good intentions but encourage fraud. I once testified in a case venued in a valued property state where the insured purchased a house for $14,000 in a depressed area of the state, insured it for $87,000, and then set it afire seeking to profit from the fire. He would have succeeded if he was an effective arsonist and only failed when the jury concluded he set the fire as an arson for profit. In this case the greed from a legitimate fire loss was excessive and the attempt to profit from the fire failed because the trial and appellate court were able to read the policy and recognize that all of the structures needed to be destroyed to collect the full value.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

“Insurance Fraud & Weapons to Defeat Insurance Fraud”

In Two Volumes

Product DetailsInsurance fraud continually takes more money each year than it did the last from the insurance buying public. No one knows the actual amount with any certainty because most attempts at insurance fraud succeed. Estimates of the extent of insurance fraud in the United States range from $87 billion to more than $300 billion every year.

Insurers and government backed pseudo-insurers can only estimate the extent they lose to fraudulent claims. Lack of sufficient investigation and prosecution of insurance criminals is endemic. Most insurance fraud criminals are not detected. Those that are detected do

so because they became greedy, sloppy and unprofessional so that the attempted fraud becomes so obvious it cannot be ignored.

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Insurance Fraud & Weapons to Defeat Fraud - Volume Two: A Manual for Those Working to Defeat Insurance Fraud by [Zalma, Barry]This book contains appellate decisions regarding insurance fraud from federal and state appellate courts across the country and full text of many insurance fraud statutes.

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Volume Two Available as a Kindle book and a paperback


About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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